Shinzo Abe, Japan's prime minister and president of the ruling Liberal Democratic Party (LDP), gestures as he speaks during a news conference at the party's headquarters in Tokyo, Japan, on Monday, Dec. 15, 2014. Prime Minister Shinzo Abe claimed a mandate for his economic program after his gamble on early elections paid off with a sweeping victory that forced the leader of the opposition to resign. (Kiyoshi Ota/Bloomberg)
SHINZO ABE has made, at best, only modest progress in reviving the Japanese economy during his two years as prime minister. But his bet that voters would agree with him that there’s no alternative to his policies paid off in a snap election Sunday. Despite a low turnout, his governing coalition won a two-thirds majority in the Diet’s lower house, which allows it to sweep aside opposition to its legislation. Mr. Abe, the 17th Japanese prime minister in 25 years, could become one of the longest-serving, with up to four more years added to his term.
The victory could give Mr. Abe the political impetus to press forward with reforms that have stalled — provided he is not blocked by special interests within his party or distracted by his nationalist political tendencies. So far, monetary loosening by the central bank and stimulus spending by the government have boosted the stock market and triggered a devaluation of the yen that has, in turn, delivered big profits to exporting companies such as Toyota. But the incomes of most Japanese are stagnant, while a consumption tax increase this year pushed the economy into a recession.
Most important, the “third arrow” of Mr. Abe’s platform, structural economic reform, has yet to progress very far. The prime minister pledged in a post-election news conference to pressure companies to raise salaries, but a more effective, if less populist, action would be the passage of labor reforms to make hiring and firing easier.
Similarly, Mr. Abe could accomplish a large piece of restructuring by completing free-trade agreements, including the Trans-Pacific Partnership with the United States and 10 other nations. The prime minister and his top aides have been saying they want to do just that — but in a key negotiating session with the United States in September, Tokyo offered no meaningful concessions in the critical area of agricultural subsidies.
Mr. Abe had some reason to hold back, since President Obama was unable to win trade promotion authority from Congress, which will be needed for U.S. ratification of the TPP. But Mr. Abe’s renewed mandate and the Republican takeover of the U.S. Senate should change that calculus. Trade is one area where the incoming Senate majority leader, Mitch McConnell (R-Ky.), and Mr. Obama appear inclined to cooperate. A clear signal that Tokyo is ready to move forward with the TPP — in the form of a more realistic position on agriculture — could help spur the new Congress to grant that authority.
Mr. Abe may be tempted to diverge, as he has before, from the hard work of economic reform to a more divisive nationalist agenda. A useful reinterpretation of the constitution that would allow Japanese military forces more leeway in defending allies requires implementing legislation in parliament, which the government can be expected to seek. But Mr. Abe would be wise to avoid more political acts, like his visit a year ago to a shrine where Japanese war criminals are among those memorialized. Mr. Abe’s ambitions for a revitalized Japan will depend above all on the nation’s renewed economic health.